The Biden administration is proposing a plan that would lower federal student loan payments for millions of Americans, including a pause on student loan payments for those making under $30,600 per year.
The proposed changes would be based on income, with the pause on student loan payments increasing from the current $24,000 to the new level.
Other borrowers could receive a lower payment amount each month, with undergraduate borrowers above that threshold paying no more than 5% of income instead of the current 10%. Both undergraduate and graduate debt borrowers would pay between 5% and 10% of their income based on a weighted average of their balances.
“Today, we’re making a new promise to today’s borrowers and for generations to come: Your student loan payments will be affordable,” Secretary of Education Miguel Cardona told reporters Monday evening, according to CNN. “You won’t be buried under an avalanche of student interest, and you won’t be saddled with a lifetime of debt.”
Roughly eight million people are currently enrolled in income-based student loan repayment plans, CNN reported. The plans extend repayment periods from 10 years to up to 25 years with a promise to forgive the remaining balance at the end of the period.
Borrowers must enroll and submit annual information about income and family size to determine monthly payments and remain eligible. Many borrowers have complained that the monthly loan payment amounts are unbearable, especially during the COVID-19 pandemic.
The new plan would also expand the income amount that applies to families. A borrower in a family of four making less than $62,400 per year would not be required to make monthly payments on their loans under the new proposal.
The proposal could also decrease the number of years necessary to receive loan forgiveness. Instead of 20 or 25 years, a borrower could receive student loan forgiveness after just 10 years if they borrowed $12,000 or less, The Washington Post noted.
Several exclusions and limitations would apply under the new policy. For example, Parent Plus loans are excluded from the program. Many of the policies also only apply to undergraduate loans.
President Joe Biden moved to provide student loan forgiveness last year for millions of borrowers ahead of the 2022 midterms. The executive action has since been tied up in a court battle that the Supreme Court agreed in December to hear in 2023.
As The Daily Wire reported in November, U.S. District Judge Mark Pittman ruled against the student loan forgiveness plan, saying that it was illegal.
“In this country, we are not ruled by an all-powerful executive with a pen and a phone,” Pittman wrote. “Instead, we are ruled by a Constitution that provides for three distinct and independent branches of government.”
Under Biden’s program, over 26 million borrowers have applied to the Department of Education for forgiveness and could receive up to $10,000 in student debt relief if they make less than $125,000 or $250,000 per household.
The nonpartisan Congressional Budget Office estimated that Biden’s student loan forgiveness effort would cost around $400 billion. The Biden administration claimed it would cost approximately $300 billion.